This article was created in partnership with Unica.
A silent reshaping is underway in condominium insurance, one that’s leaving unit owners with significantly more exposure - and in many cases without realizing it. The risk is shifting from the condo corporation to individual unit owners, a shift that’s accelerating two key mechanisms: skyrocketing deductibles and a narrowing definition of what a standard unit includes.
In a recent interview with Insurance Business, Sebastian Morana, IICRC Triple Master Restorer-certified Road Adjuster at Unica Insurance, dubbed this phenomenon the ‘deductible tsunami.”
“Just a few years ago, the corporation’s deductible for the unit owner share was typically $10,000 to $25,000,” explained Morana.
Today, however, he told IB that it’s not uncommon to see deductibles as high as $100,000 or even $250,000. What used to be an incidental chargeback has become a potentially life-altering financial burden.
“When a loss starts in someone’s unit, the condo bylaws often allow the board to charge that entire deductible back to the unit owner responsible for the loss,” Morana added. “I’ve heard from fellow adjusters whose clients have called them months later saying, ‘You’ve got to see this document I just got. Is this a joke?’”
While many policies may cover these costs, Morana explained that the emotional toll is real and often compounded by a lack of understanding of the risk until it’s too late. And if high deductibles are a financial shock, the second trend is more of a slow erosion of structural protection.
“During the pre-construction phase, when unit definitions are being created, there’s a growing tendency to strip the definition of a unit down to its bare bones - often just drywall and subfloor,” Morana added. Items like flooring, cabinetry, vanities, countertops, and even baseboards - features most unit owners assume are part of the building - are increasingly redefined as their personal responsibility.
“This means that all of those things are now legally the unit owner’s responsibility to insure and to replace after a loss.”
But the risk here isn’t simply about damage, it’s about the unnoticed absorption of six-figure liabilities often without adequate coverage in place.
“Owners are unknowingly taking on tens and even hundreds of thousands of dollars in risk for building-related components that used to be covered by the corporation,” Morana warned. “And while many seasoned brokers understand the implications of a shrinking standard unit definition, few clients do. That is, until they’re facing a devastating claim.”
“The standard unit bylaw is a legal document used by the condominium corporation. It defines what is considered to be a standard unit for the purposes of insurance, repairs, and maintenance. Its primary function is to clarify the responsibilities for repairs between the condo corporation and the individual unit owners,” added Morana. “The shift is creating a completely new claims profile, and it may put a significant strain on personal lines.”
Essentially, claims that used to involve modest reimbursements for contents are now snowballing into complex, high-value losses.
“A water leak that might have been a small claim on a unit owner’s policy is now turning into a $75,000 property claim that may include a massive deductible chargeback,” he said.
Morana told IB that this is fundamentally changing the nature of the risk being carried. Back in 2020, the average condo claim was around $5,000 to $10,000, with $15,000 being the upper limit. Now, it’s commonplace to see $25,000, $50,000, even $100,000. The problem, Morana explained, is that most personal lines policies weren’t designed to handle what are now effectively commercial-sized property losses.
“Commercial insurers for condo corporations are successfully shedding the risk of these mid-sized claims, while personal lines insurance is being forced to pick it up,” he said. “This is putting real pressure on loss ratios.”
What this means for the insurance industry is a forced re-evaluation of pricing, underwriting, and product design. It also places a new level of responsibility on brokers to detect and advise on these hidden exposures.
“Our philosophy is that the broker is the client’s most important risk advisor,” added Morana. “We love the broker channel because they help protect their clients’ financial momentum. Our primary guidance to brokers is simple - get the documents. When a client says, ‘I bought a condo,’ the broker needs to ask for the standard unit bylaw and the certificate of insurance.”
Those two documents reveal exactly what is and isn’t insured, and how much exposure the unit owner could face if something goes wrong. As Morana told IB, brokers really need to keep an eye out for two prevalent red flags here - the exact definition of a standard unit and the corporation’s deductible. This discovery process, he revealed, must become routine as the risks of ignoring it are growing, for both the client and the broker’s own E&O exposure.
And in direct response to these structural shifts, Unica has taken a proactive approach through product development.
“We recognized this early and structured our LIVEasy for Condo Owners policy to respond directly to these new and larger risks,” added Morana. Rather than create multiple piecemeal endorsements, Unica introduced a Global Limit of Condominium Protection - a single, flexible pool of coverage that applies where the need arises most.
“This global limit addresses the three biggest condo risks,” he said. “The first is unit improvements and betterments. That’s our direct answer to the shrinking standard unit. We ensure that funds are there to replace floors, cabinets, countertops, fixtures, all on a replacement cost basis, not just depreciated value.”
Second is coverage for common elements loss assessment - that so-called deductible tsunami.
“Our policy explicitly states that we will pay the unit owner’s share of an assessment resulting from the condo’s policy deductible.”
The third piece is unit additional protection coverage. “This is the final safety net. If the corporation’s insurance is missing, inadequate, or ineffective, then this steps in to protect the unit owner,” he said.
And by bundling all three under one global limit, Morana told IB that Unica provides brokers with a clean, high-performance solution to a messy, mid-sized problem.
“We wanted to give brokers a powerful and straightforward tool to ensure that there are no gaps if the client is hit with one of these complex mid-sized losses,” he said. “That commitment extends to our claims mission statement: to provide the best claim service in Canada based on unparalleled simplicity. And to make that promise tangible, if the adjusted loss exceeds $50,000, we waive the entire deductible under LIVEasy. That’s a huge relief to a client facing a significant loss.”
Ongoing broker training, client education materials, and consultative underwriters complete Unica’s unique support model.
“When they see a condo application, our underwriters proactively engage with the broker on questions designed to flesh out that risk,” Morana added. “We stay ahead by being a true partner. We give them the tools, the product design and the insight for the modern condo world.”
